Can someone trust others too much?

When is it right to abandon one’s philosophy to protect one's self?

In a competitive, dog eat dog society, true compassion and trust is something rare. There are way too many people who are critical of those around them with a "trust no one” mentality that forces compassion to take the back seat. In Fashions for Men, Peter (a shop owner) could see the good in people. However, this backfires on him as the people closest to him take advantage of him and his kindness, which causes his shop to face bankruptcy.

In this case, Peter had too much trust in those around him.

His philosophy of others was admirable but I think that a line should be drawn when someone takes advantage of it. This was a lesson learned by a close friend of mine. Just like Peter, my friend never failed to see the good in people. My friend, Bill, tried to help someone who had a difficult time by helping him pay for his gym membership after the person lost his job. Being that the two were gym partners, Bill thought that paying for his membership while his friend was struggling was indisputably the right thing to do. Bill’s gym partner eventually got his job back but did not tell Bill that he was now able to pay his gym membership. Bill heard through a mutual friend that his gym buddy was now working again but Bill refused (or did not want?) to believe the mutual friend since he was not told by his gym partner. Eventually, Bill found out and realized that he was paying for his gym partner's membership months after he got his job back. Just like Peter, Bill lacked the balance of compassion/trust and being able to protect himself.

With all that said, being able to see the good in people is an admirable trait. As humans, trust and compassion should be emphasized. However, like most aspects of being a well-rounded person, balance has to exist.

What is that line?How do find the proper balance between compassion/trust and protecting one's self?